U.S. airlines are expected to have strong 2022 as traffic normalizes

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• Morgan Stanley says it is bullish on U.S. airline stocks on the expectation for normal service to resume in Q2 and accelerate during the second half of the year to set up a strong 2023.
• While analyst Ravi Shanker and team think a rising tide will lift all the boats, the firm is adjusting its order of preference by bringing up legacy airlines and pushing ULCCs down the list.
• What about inflation? "We believe the higher costs should drive greater capacity discipline which together with strong incremental margins (reopening costs already incurred but the revenue boost will only come in 2022) and improving yield/mix and pricing discipline should allow EBIT to exceed 2019 levels by 2023," updates Shanker. "In fact, if inflation continues at the current pace, we expect 2023 RASM to exceed 2019 levels (vs. our prior expectation of a slow RASM recovery over 5-7 years)," he adds.
• American Airlines Group (NASDAQ:AAL) is upgraded to an Equalweight rating from Underweight. Meanwhile, Morgan Stanley has Overweight ratings on JetBlue (NASDAQ:JBLU), Allegiant Travel (NASDAQ:ALGT), Frontier Group Holdings (NASDAQ:ULCC), Delta Air Lines (NYSE:DAL), Southwest Airlines (NYSE:LUV) and Alaska Air Lines (AAL).
• Compare Seeking Alpha Quant Ratings across the U.S. airline sector.

Comments

[dandroidz]

Its been way too much fun shorting airlines

[chazsf]

@dandroidz Are you still short any?

[dandroidz]

@chazsf No, I come and go against $AAL when they go between $19.50-$20.

[BWAHAHAHAHAHA]

DAL, LUV!!!!

[OverTheHorizon]

@BWAHAHAHAHAHA
AAL ULCC MESA